Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 25, 2016 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Fuse Medical, Inc. | ||
Entity Central Index Key | 319,016 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1,547,560 | ||
Entity Common Stock, Shares Outstanding | 5,870,808 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 8,157 | $ 67,555 |
Accounts receivable, net of allowance of $15,145 and $220, respectively | 298,011 | 196,236 |
Inventories | 81,209 | 131,382 |
Prepaid expenses and other receivables | $ 18,828 | 49,250 |
Other receivables - related parties | 50,000 | |
Total current assets | $ 406,205 | 494,423 |
Property and equipment, net | 24,978 | 48,961 |
Security deposit | 3,822 | 2,489 |
Total assets | 435,005 | 545,873 |
Current liabilities: | ||
Accounts payable | 295,579 | 276,619 |
Accounts payable - related parties | 22,202 | 43,134 |
Accrued expenses | $ 12,267 | 10,366 |
Notes payable, current portion | 17,250 | |
Total current liabilities | $ 330,048 | $ 347,369 |
Notes payable - related parties | 100,000 | |
Total liabilities | $ 430,048 | $ 347,369 |
Stockholders' equity | ||
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 par value; 100,000,000 and 500,000,000 shares authorized; 6,890,808 and 5,510,808 shares issued and outstanding, respectively | $ 68,908 | $ 55,108 |
Additional paid-in capital | 2,251,093 | 1,656,893 |
Accumulated deficit | (2,315,044) | (1,513,497) |
Total stockholders' equity | 4,957 | 198,504 |
Total liabilities and stockholders' equity | $ 435,005 | $ 545,873 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Net of allowance, accounts receivable | $ 15,145 | $ 220 |
Stockholders' equity | ||
Preferred Stock Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 100,000,000 | 500,000,000 |
Common Stock Shares Issued | 6,890,808 | 5,510,808 |
Common Stock Shares Outstanding | 6,890,808 | 5,510,808 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements Of Operations | ||
Revenues | $ 1,676,609 | $ 941,086 |
Cost of revenues | 664,266 | 485,384 |
Gross profit | 1,012,343 | 455,702 |
Operating expenses: | ||
General, administrative and other | $ 1,804,371 | 1,469,864 |
Merger costs | 320,448 | |
Total operating expenses | $ 1,804,371 | 1,790,312 |
Operating loss | $ (792,028) | (1,334,610) |
Other income (expense): | ||
Interest income | 1,177 | |
Interest expense | $ (7,112) | $ (71,612) |
Loss on disposal of property and equipment | (2,407) | |
Total other income (expense) | (9,519) | $ (70,435) |
Net loss | $ (801,547) | $ (1,405,045) |
Net loss per common share - basic and diluted | $ (0.13) | $ (0.37) |
Weighted average number of common shares outstanding - basic and diluted | 6,189,329 | 3,793,489 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Subscriptions Receivable | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2013 | $ 36,000 | $ 79,600 | $ (500) | $ (12,964) | $ 102,136 |
Beginning Balance, Shares at Dec. 31, 2013 | 3,600,000 | ||||
Issuance of common shares in connection with Golf Rounds.com, Inc. merger, Amount | $ 4,013 | (4,013) | (28,411) | $ (28,411) | |
Issuance of common shares in connection with Golf Rounds.com, Inc. merger, Shares | 401,280 | ||||
Reclassification of undistributed earnings of Fuse Medical, LLC to Additional Paid-In Capital upon its transition from a nontaxable entity to a taxable entity | $ 26,494 | (26,494) | |||
Distributions prior to the merger | $ (40,583) | $ (40,583) | |||
Proceeds from subscriptions receivable | $ 500 | 500 | |||
Conversion of notes payable and accrued interest into common shares, Amount | $ 15,095 | $ 739,669 | 754,764 | ||
Conversion of notes payable and accrued interest into common shares, Shares | 1,509,528 | ||||
Capital contribution from debt forgiveness | $ 815,143 | 815,143 | |||
Net loss | $ (1,405,045) | (1,405,045) | |||
Ending Balance, Amount at Dec. 31, 2014 | $ 55,108 | $ 1,656,893 | $ (1,513,497) | 198,504 | |
Ending Balance, Shares at Dec. 31, 2014 | 5,510,808 | ||||
Common stock issued for cash, Amount | $ 3,800 | 186,200 | 190,000 | ||
Common stock issued for cash, Shares | 380,000 | ||||
Fair value of vested stock options | 168,000 | 168,000 | |||
Common stock issued for services rendered, Amount | $ 10,000 | $ 240,000 | 250,000 | ||
Common stock issued for services rendered, Shares | 1,000,000 | ||||
Net loss | $ (801,547) | (801,547) | |||
Ending Balance, Amount at Dec. 31, 2015 | $ 68,908 | $ 2,251,093 | $ (2,315,044) | $ 4,957 | |
Ending Balance, Shares at Dec. 31, 2015 | 6,890,808 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (801,547) | $ (1,405,045) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 15,145 | 6,090 |
Depreciation | 25,073 | $ 13,280 |
Loss on disposal of property and equipment | 2,407 | |
Transfer of property and equipment as part of expense reimbursement | 6,000 | |
Stock-based compensation | $ 418,000 | |
Advances to Golf Rounds.com, Inc. expensed to merger costs | $ 105,000 | |
Changes in operating assets and liabilities, net of effects of acquisition: | ||
Accounts receivable | $ (116,920) | (54,339) |
Accounts receivable - related parties | 2,538 | |
Inventories | $ 50,173 | 111,733 |
Prepaid expenses and other receivables | 30,422 | (38,285) |
Security deposit | (3,822) | (2,489) |
Accounts payable | 18,960 | 93,210 |
Accounts payable - related parties | (20,932) | (5,205) |
Accrued expenses | 1,901 | 4,728 |
Net cash used in operating activities | (375,140) | (1,168,784) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (8,308) | $ (60,954) |
Proceeds from the disposal of property and equipment | $ 1,300 | |
Advances to Golf Rounds.com, Inc. | $ (10,000) | |
Cash acquired in reverse merger | 641 | |
Net cash used in investing activities | $ (7,008) | (70,313) |
Cash flows from financing activities: | ||
Proceeds from (repayments to) line of credit, net | (100,000) | |
Advances to related parties | $ (43,240) | (92,611) |
Repayments received from related parties | $ 93,240 | 74,993 |
Proceeds from issuance of promissory notes | $ 727,776 | |
Repayments of promissory notes | $ (17,250) | |
Proceeds from issuance of promissory notes to related parties | 100,000 | $ 724,238 |
Proceeds from sale of common stock | $ 190,000 | |
Proceeds from subscriptions receivable | $ 500 | |
Distributions prior to the merger | (40,583) | |
Net cash provided by financing activities | $ 322,750 | 1,294,313 |
Net increase (decrease) in cash and cash equivalents | (59,398) | 55,216 |
Cash and cash equivalents - beginning of period | 67,555 | 12,339 |
Cash and cash equivalents - end of period | 8,157 | 67,555 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 3,337 | $ 13,439 |
Non-cash investing and financing activities: | ||
Transfer security deposit as part of expense reimbursement | $ 2,489 | |
Conversion of notes payable and accrued interest into common shares | $ 1,569,907 | |
Assumption of net liabilities in reverse merger | 28,411 | |
Reclassification of undistributed earnings of Fuse Medical, LLC to Additional Paid-In Capital upon its transition from a nontaxable entity to a taxable entity | $ 26,494 |
Nature of Operations and Going
Nature of Operations and Going Concern | 12 Months Ended |
Dec. 31, 2015 | |
Nature Of Operations And Going Concern | |
Note 1. Nature of Operations and Going Concern | Overview Fuse Medical, Inc. (together with its subsidiaries, the "Company" or "Fuse Medical") was formed in Delaware on July 18, 2012 as Fuse Medical, LLC. Fuse Medical V, LP was formed in Texas on November 15, 2012 and upon formation was owned 59% by Fuse Medical, LLC. Fuse Medical VI, LP was formed in Texas on January 31, 2013 and upon formation was owned 59% by Fuse Medical, LLC. On February 12, 2015, Certificates of Termination were filed for Fuse Medical V, LP and Fuse Medical VI, LP. On February 20, 2015, a Certificate of Cancellation was filed in Delaware, and on August 5, 2015, a Certificate of Withdrawal was filed in Texas, for Fuse Medical, LLC. On December 18, 2013, Fuse Medical, LLC entered into an Agreement and Plan of Merger (the "Merger Agreement") with Golf Rounds.com, Inc. (the "Registrant"), Project Fuse LLC (a wholly-owned subsidiary of Golf Rounds.com, Inc.) ("Merger Sub"), and D. Alan Meeker, solely in his capacity as the representative of the members of Fuse Medical, LLC (the "Representative"). Effective as of May 28, 2014, prior to the consummation of the Merger, Golf Rounds.com, Inc. amended its certificate of incorporation to change its name from "GolfRounds.com, Inc." to "Fuse Medical, Inc." On May 28, 2014, the transactions contemplated by the Merger Agreement closed wherein Merger Sub merged with and into Fuse Medical, LLC, with Fuse Medical, LLC surviving as a wholly-owned subsidiary of Fuse Medical, Inc. (the "Merger"). Accordingly, on May 28, 2014, the Company was recapitalized in a reverse merger (See Note 10). All references to the Company or Fuse Medical before May 28, 2014 are to Fuse Medical, LLC. On May 30, 2014, the Company changed its fiscal year end from August 31 to December 31. Fuse Medical distributes diversified healthcare products and supplies, including biologics, internal fixation products and bone substitute materials in several states. The Company strives to provide cost savings and clinical outcomes to its customers, which include physicians and medical facilities. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. As shown in the accompanying financial statements, we have incurred a net loss of $801,547 and used $375,140 of cash in our operating activities during the year ended December 31, 2015. As of December 31, 2015, we had $8,157 of cash and cash equivalents on hand, stockholders' equity of $4,957 and working capital of $76,157. While management expects operating trends to improve over the course of 2016, the Company's ability to continue as a going concern is contingent on securing additional debt or equity financing from outside investors. These matters raise substantial doubt about the Company's ability to continue as a going concern. During the period from December 31, 2013 through June 16, 2014, the Company issued several two-year promissory notes in exchange for aggregate cash proceeds of $1,512,014, of which 784,238 was received from related parties. On December 31, 2014, the foregoing borrowings were converted to shares of common stock. Management plans to continue to implement its business plan and to fund operations by raising additional capital through the issuance of debt and equity securities. Commencing with the second quarter of 2015, we began to refocus our efforts to increase revenues derived from the sale of biologics, which we expect will increase the amount of gross profits from operations. During 2015, we received proceeds of: (i) $100,000 from a loan from a significant stockholder; (ii) $100,000 from the sale of common shares to a related party; and (iii) $90,000 from the sale of common shares in private offerings. No assurance can be given that such financing will be available, or if available, at rates favorable to the Company or its stockholders. The estimated costs of operations while we ramp up our revenues is substantially greater than the amount of funds we had available on December 31, 2015. The Company's existence is dependent upon management's ability to implement its business plan and/or obtain additional funding. There can be no assurance that the Company's financing efforts will result in profitable operations or the resolution of the Company's liquidity problems. Even if the Company is able to obtain additional financing, it may include undue restrictions on our operations in the case of debt, or cause substantial dilution for our stockholders in the case of equity financing. The accompanying financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies | |
Note 2. Significant Accounting Policies | Principles of Consolidation The consolidated financial statements include the accounts of Fuse Medical, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts, valuation of inventories, the estimates of depreciable lives and valuation of property and equipment, and the valuation allowance on deferred tax assets. Earnings (Loss) Per Share The Company's computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company's net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would have occurred if securities or other contracts to issue common shares (e.g. warrants and options) had been exercised or converted into common shares at the beginning of the period, or issuance date, if later, and had shared in the net income (loss) of the Company. Diluted EPS is computed using the treasury stock method, which assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common shares at the average market price during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The weighted average number of common shares outstanding has been retroactively restated for: (1) the equivalent number of shares received by the accounting acquirer as a result of the reverse merger as if these shares had been outstanding as of the beginning of the earliest period presented; and (2) the 14.62 to 1 reverse stock split that occurred May 28, 2014 (See Note 10). As of December 31, 2015 and 2014, common stock equivalents included options to purchase 609,576 and 11,628 common shares, respectively. These instruments are not considered in the calculation of diluted loss per share because the effect would be anti-dilutive. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: · Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; · Level 2—Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and · Level 3—Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of notes payable approximates their fair value based upon their effective interest rates. Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts Receivable Accounts receivables are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable. Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts. The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations, such as bankruptcy proceedings and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are reevaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary. Accounts deemed uncollectible are written off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market. Inventories consist entirely of finished goods and include biologics and internal fixation products. The Company reviews the market value of inventories whenever events and circumstances indicate that the carrying value of inventories may not be recoverable from the estimated future sales price less cost of disposal and normal gross profit. In cases where the market values are less than the carrying value, a write down is recognized equal to an amount by which the carrying value exceeds the market value of inventories. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets per the following table. Leasehold improvements are amortized over the lesser of their useful life or the lease term. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred. Category Amortization Period Computer equipment 3 years Furniture and fixtures 5 years Office equipment 3 years Software 3 years Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed and a gain or loss is recorded in the consolidated statements of operations. Long-Lived Assets The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry or economic trends, a significant decline in the Company's stock price for a sustained period of time, and changes in the Company's business strategy. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. Based upon management's assessment, there were no indicators of impairment of its long lived assets at December 31, 2015 and 2014. Revenue Recognition Revenues are comprised of sales of medical biologics, internal fixation products, bone substitute materials and other medical supplies. For customers that order products as needed (i.e. for specific cases), the Company provides these products on a consignment basis and invoices the customer on the date the product is utilized. For other customers, the Company invoices the customers when the products are shipped. Payment terms are net 30 days after the invoice date. Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. Net revenues have been reduced to account for sales returns, rebates and other incentives. Cost of Revenues Cost of revenues consists of cost of goods sold and freight and shipping costs for items sold to customers. Shipping and Handling Fees The Company includes shipping and handling fees billed to customers in revenues and the related costs in cost of revenues. Leases The Company enters into various lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Leases may contain initial periods of free rent and/or periodic escalations. When such items are included in a lease agreement, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as a deferred rent liability. The Company expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred. Income Taxes The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income. Prior to the recapitalization discussed in Note 1, the members of the consolidated group included Fuse Medical, LLC, a Delaware-registered limited liability corporation, and Fuse Medical V, LP and Fuse Medical VI, LP, which were Texas-registered limited partnerships; all of which are taxed as partnerships for federal income tax purposes. As such, there were no state or corporate tax liabilities due for these entities. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of December 31, 2015, the Company had no liabilities for uncertain tax positions. The Company's policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Segment Information The Company operates in one reportable segment including medical products and supplies. The Company's chief operating decision maker, its CEO and President, manages the Company's operations as a whole, and no revenue, expense or operating income information is evaluated by the chief operating decision maker on any component level. Stock-Based Compensation Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient's performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company's financial statements and disclosures. In June 2014, the FASB issued Accounting Standards Update No. 2014-12, "Compensation – Stock Compensation (Topic 718)". The ASU was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company's consolidated financial position or results of operations. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern", which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company's financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, "Leases", which requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of the adoption of ASU 2016-02 on the Company's financial statements and disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
Advances to Golf Rounds.com, In
Advances to Golf Rounds.com, Inc. | 12 Months Ended |
Dec. 31, 2015 | |
Advances To Golf Rounds.com Inc. | |
Note 3. Advances to Golf Rounds.com, Inc. | On October 18, 2013, the Company advanced $39,000 to Golf Rounds.com, Inc., a publicly-held company, in exchange for a six-month promissory note receivable due April 15, 2014. On November 4, 2013, the Company advanced an additional $24,000 to Golf Rounds.com, Inc. in exchange for a six-month promissory note receivable due May 5, 2014. On December 26, 2013, the Company advanced an additional $32,000 to Golf Rounds.com, Inc. in exchange for a six-month promissory note receivable due June 26, 2014. On April 1, 2014, advances in the aggregate amount of $63,000 due from Golf Rounds.com, Inc. maturing April 15, 2014 and May 5, 2014 were amended whereby the maturity date was extended to June 26, 2014. On May 2, 2014, the Company advanced an additional $10,000 to Golf Rounds.com, Inc. in exchange for a promissory note receivable due June 26, 2014. The advances were unsecured, required interest at a rate of 3.0% per annum and would have required payment of principal and interest at maturity. On May 28, 2014, as a result of the closing of the Merger, the aggregate amount of the advances of $105,000 were expensed to merger costs to acquire Golf Rounds.com, Inc. (See Notes 1 and 10). During the year ended December 31, 2014, interest income of $1,177 was recognized on these advances. |
Other Receivables - Related Par
Other Receivables - Related Parties | 12 Months Ended |
Dec. 31, 2015 | |
Other Receivables - Related Parties | |
Note 4. Other Receivables - Related Parties | During the year ended December 31, 2014, the Company advanced an aggregate of $92,611 to and received an aggregate of $74,993 from three entities that are owned partially by certain officers and directors of the Company. The advances were unsecured, non-interest bearing and due on demand. During the three months ended March 31, 2015, the Company allocated an aggregate of $43,240 of compensation paid to the Company's General Counsel to one of the entities that is owned partially by certain officers and directors of the Company. During the year ended December 31, 2015, the Company was reimbursed the entire amount of $93,240 due from the three entities that are owned partially by certain officers and directors of the Company. The balance due from the three entities was $0 and $50,000 as of December 31, 2015 and 2014, respectively (See Note 13). |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property And Equipment | |
Note 5. Property and Equipment | Property and equipment consisted of the following at December 31, 2015 and December 31, 2014: December 31, 2015 December 31, 2014 Computer equipment $ 31,053 $ 36,240 Furniture and fixtures 9,315 15,977 Leasehold improvements 6,728 - Office equipment 1,580 - Software 10,500 10,500 59,176 62,717 Less: accumulated depreciation (34,198 ) (13,756 ) Property and equipment, net $ 24,978 $ 48,961 On September 1, 2015, the Company transferred a security deposit of $2,489 and property and equipment having a net book value of $3,062 in order to settle $6,000 of expense reimbursement to an individual that was a former director and Chief Executive Officer of the Company, resulting in a gain on disposition of $449 (See Notes 9 and 13). During the year ended December 31, 2015, the Company sold furniture and fixtures having a net book value of $4,156 for cash proceeds of $1,300, resulting in loss on disposals of property and equipment of $2,856. Depreciation expense for the years ended December 31, 2015 and 2014 was $25,073 and $13,280, respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Expenses | |
Note 6. Accrued Expenses | Accrued expenses consisted of the following at December 31, 2015 and December 31, 2014: December 31, 2015 December 31, 2014 Accrued payroll and related costs $ 2,705 $ 235 Accrued interest 3,796 21 Other accrued expenses 5,766 10,110 Accrued expenses $ 12,267 $ 10,366 |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2015 | |
Line Of Credit | |
Note 7. Line of Credit | Commencing October 10, 2012, the Company maintained a line of credit with a bank, up to a maximum credit line of $100,000. The line of credit bore interest equal to 2.25% per year based on a year of 360 days. The line of credit required minimum monthly payments consisting of interest only. The line of credit was secured by a money market account having an approximate balance of $105,000 that is: (i) owned by an individual that is both an officer and a director of the Company and his spouse and (ii) is maintained at the bank extending the line of credit. The line of credit was due on demand or, if no demand was made, all outstanding principal and accrued interest on the line of credit was due October 10, 2014. On October 16, 2014, the line of credit was fully repaid and voluntarily terminated. During the year ended December 31, 2014, interest expense of $1,937 was recognized on the line of credit. The balance due on the line of credit as of December 31, 2014 was $0. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable | |
Note 8. Notes Payable | Notes Payable On May 28, 2014, as part of the merger with Golf Rounds.com, Inc., the Company assumed an aggregate of $17,250 of outstanding two-year promissory notes payable maturing July 29, 2015 through August 28, 2015 as well as accrued interest payable of $21. The notes were unsecured, bore interest at 3.25% and required quarterly payments of interest only. The outstanding principal balance along with all accrued and unpaid interest was paid at maturity during 2015 and no additional amounts are due on these notes payable. Notes Payable – Related Parties On December 31, 2013, the Company issued a two-year promissory note payable in exchange for aggregate cash proceeds of $60,000. During the period from January 15, 2014 through June 16, 2014, the Company issued several two-year promissory notes in exchange for aggregate cash proceeds of $724,238. The funds were received from entities controlled by certain officers and directors of the Company. The officers and directors also owned or partially owned the entities from which the funds were received. The notes were unsecured, bore interest at 7.0% and required 18 monthly payments of interest only commencing at the beginning of month seven. The notes included a provision that in the event of default the interest rate would have increased to the default interest rate of 18%. The first six months of interest was deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest was due at maturity (See Notes 10 and 13). During the period from January 14, 2014 through May 23, 2014, the Company issued three two-year promissory notes in exchange for aggregate cash proceeds of $727,776 from an entity that is controlled by an individual that was a former director and Chief Executive Officer of the Company. The notes were unsecured, bore interest at 7.0% and required 18 monthly payments of interest only commencing at the beginning of month seven. The notes included a provision that in the event of default the interest rate would have increased to the default interest rate of 18%. The first six months of interest was deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest was due at maturity (See Notes 10 and 13). On December 31, 2014, the outstanding principal balance of notes payable of $1,512,014 and accrued interest of $57,893 was converted into 1,509,528 common shares of the Company that had a fair value of $754,764. The aggregate excess of the principal balance over the fair value of the shares issued of $815,143 has been reflected as a contribution of capital (See Notes 10 and 13). On January 15, 2015, the Company issued a two-year promissory note in exchange for cash proceeds of $100,000 from an entity that is controlled by an individual that was a former director and Chief Executive Officer of the Company. The note is unsecured, bears interest at 7.0% and requires 18 monthly payments of interest only commencing at the beginning of month seven. The note includes a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity (See Note 13). Notes payable consisted of the following at December 31, 2015 and 2014: December 31, 2015 December 31, 2014 Note payable - originating July 30, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at July 29, 2015 $ - $ 6,000 Note payable - originating August 29, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at August 28, 2015 - 11,250 Note payable - related party originating January 15, 2015; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 15, 2017 100,000 - Total 100,000 17,250 Less: Current maturities - (17,250 ) Amount due after one year $ 100,000 $ - During the year ended December 31, 2015 and 2014, interest expense of $7,112 and $69,675, respectively, was recognized on outstanding notes payable. As of December 31, 2015 and 2014, accrued interest payable was $3,796 and $21, respectively, which is included in accrued expenses on the accompanying consolidated balance sheet. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments And Contingencies | |
Note 9. Commitments and Contingencies | Legal Matters On January 27, 2014, M. Richard Cutler and Cutler Law Group, P.C. (the "Plaintiffs") filed a complaint in the District Court of Harris County, Texas, 2014-03355, against Fuse, Alan Meeker, Rusty Shelton, Jonathan Brown, Robert H. Donehew and Golf Rounds.com, Inc. (the "Defendants"). On April 21, 2014, the complaint was dismissed for "want of prosecution." The Plaintiffs had 30 days from April 21, 2014 to file a motion to reinstate the case and no timely action was taken by the Plaintiffs. However, the Plaintiffs did file a motion to reinstate on May 22, 2014 and it was granted. The Defendants argued a Motion to Dismiss before the court on July 25, 2014 and, on July 28, 2014, the court granted the motion and dismissed the Plaintiffs' (i) breach of fiduciary duty claim against all Defendants, (ii) suit on sworn account claim against all Defendants except Fuse, and (iii) quantum meruit claim against all Defendants except Fuse. The Defendants were also awarded attorneys' fees in the amount of $4,343. Discovery in the case ended on March 25, 2015 and Plaintiffs failed to file any discovery requests during the period or seek an extension of the period. On April 27, 2015, Defendants filed a motion for summary judgment in this matter for failure to prosecute and on the grounds that the claims were not legally viable. On April 28, 2015, Plaintiffs filed a Notice of Non-Suit, which effectively withdrew the lawsuit against the Defendants without prejudice to Plaintiffs' right to refile the lawsuit at any time subject to the applicable statute of limitations. On September 18, 2015, Plaintiffs refiled a complaint in the District Court of Harris County, Texas, Cause No. 2015-55652 and added PH Squared, LLC as an additional Plaintiff. Thereafter, the term "Plaintiffs" collectively refers to M. Richard Cutler, Cutler Law Group, P.C. and PH Squared, LLC. The new complaint asserts essentially the same claims as the original nonsuited complaint: (i) suit on sworn account against Fuse; (ii) fraud against all Defendants; and (iii) breach of contract against all Defendants for allegedly violating a non-circumvention/non-disclosure agreement. Richard Cutler is the sole principal of Cutler Law Group, P.C., which provided legal representation to its clients, Craig Longhurst and PH Squared, LLC d/b/a PharmHouse Pharmacy ("Cutler's Client"), during a failed merger attempt between Fuse and Golf Rounds.com, Inc. (the "Failed Transaction"). The Plaintiffs have alleged that the Failed Transaction failed to materialize notwithstanding the efforts of Mr. Cutler, his law firm and PH Squared, LLC. The Plaintiffs have further alleged that the Defendants continued to pursue a similar transaction without Cutler's Client or the Plaintiffs. The Plaintiffs claim that the Defendants are responsible for damages in the amount of $46,465 plus interest for the breach of contract claim because Plaintiffs were not paid their legal fees by Cutler's Client and Plaintiffs did not receive equity in the merged company that would have resulted from the Failed Transaction. Plaintiffs are also asking for undisclosed damages related to the fraud and breach of contract claims, and are asking for exemplary damages as a result of allegedly intentional fraud that some or all of the Defendants allegedly committed. Plaintiffs also seek their attorneys' fees and costs for having brought the action. On November 18, 2015, Fuse filed a counterclaim against PH Squared, LLC for breach of contract and further asserted a counterclaim and third party claim against PH Squared, LLC's principle, Craig Longhurst, for fraud in the inducement. Fuse also seeks a declaratory judgment on the intended third party beneficiary status of Plaintiffs Cutler and Cutler Law Group related to a non-circumvention/non-disclosure agreement. The parties are currently conducting discovery to determine the viability of the Plaintiff's claims, although the Defendants continue to believe that the lawsuit is completely without merit and will vigorously contest it and protect their interests. However, the outcome of this legal action cannot be predicted. Operating Leases The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2015: Year ending December 31, 2016 $ 46,116 2017 47,124 2018 35,910 $ 129,150 Commencing January 1, 2013 through January 31, 2014, the Company occupied office space on a month-to-month basis for its corporate headquarters for $500 a month from Crestview Farm, an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. The individual serves as the Manager of Crestview Farm. Rent expense for these facilities was $500 for the year ended December 31, 2014 (See Note 13). Effective February 1, 2014, the Company entered into a two-year lease agreement expiring January 31, 2016 for its corporate headquarters in Fort Worth, Texas. The lease agreement required base rent payments of $2,489 per month plus common area maintenance. On September 1, 2015, the Company entered into an Assignment and Assumption of Lease Agreement (the "Agreement") whereby the Company assigned the operating lease for its corporate headquarters to an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. Under the Agreement, which was cosigned by the landlord, the entity to which the lease was assigned assumed all further obligations under the lease (See Notes 5 and 13). During the period from April 1, 2014 through November 30, 2014, the Company reimbursed a former officer on a month-to-month basis for the occasional use of this individual's apartment located in Fort Worth, Texas. The payments for the apartment included payments of $2,060 per month plus common area maintenance and utilities as incurred. Effective September 1, 2015, the Company began occupying space at its new corporate headquarters in Fort Worth, Texas on a month-to-month basis at the rate of $3,822 per month. Effective December 31, 2015, the Company entered into a sublease agreement expiring September 30, 2018 (the "Initial Term") for this space. The sublease agreement renews automatically for additional one-year periods unless written notice of the intent to not renew is provided at least 60 days prior to the end of the Initial Term. Notwithstanding, the sublease shall not extend beyond September 30, 2020 unless the sublessor extends its lease and the parties enter into a written agreement to extend the duration of the sublease. The sublease agreement requires base rent payments of $3,822 per month through September 30, 2016; $3,906 per month through September 30, 2017 and $3,990 per month through September 30, 2018, plus a pro rata share of electricity and common area maintenance. Rent for one month shall be abated when the Company performs its initial improvements to the subleased premises. The sublease includes a relocation and surrender clause whereby the sublessor has the right to cause the Company to surrender: (i) with at least 30 days notice: (a) one of the offices for a corresponding 15% reduction in rent; or (b) two of the offices for a corresponding 30% reduction in rent (either (a) or (b) deemed a partial surrender); or (ii) with at least 6 months notice, all of the office space in which sublessor shall reimburse the Company for all relocation costs not to exceed $5,000. Rent expense was $33,791 and $44,859 for the years ended December 31, 2015 and 2014, respectively. Consulting Agreements On May 1, 2014, the Company entered into a one-year consulting agreement with an individual who is a director of the Company whereby the individual shall be a Medical Director and shall receive compensation of $9,000 per month. Effective September 1, 2015, the compensation to this individual was reduced to $0 per month (See Note 13). On July 1, 2014, the Company entered into a five-year consulting agreement with an individual whereby the individual shall be the Company's General Counsel and shall receive compensation of $25,000 per month as well as a signing bonus of $61,000. On July 17, 2015, the General Counsel resigned (See Note 10). |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders Equity | |
Note 10. Stockholders' Equity | Authorized Capital Effective as of May 28, 2014, prior to the consummation of the Merger, Golf Rounds.com, Inc. amended its certificate of incorporation to increase its authorized capital stock from 12,000,000 shares of common stock having a par value of $0.01 per share to 500,000,000 shares of common stock having a par value of $0.01 per share and from zero shares of preferred stock to 20,000,000 shares of preferred stock having a par value of $0.01 per share, and to expressly authorize its board of directors to issue shares of the preferred stock, in one or more series, and to fix for each such series the voting powers, designations, preferences, or other special rights and the qualifications, limitations or restrictions. Effective December 29, 2015, the Company amended its certificate of incorporation to decrease its authorized common shares to 100,000,000 shares. Reverse Stock Split Effective as of May 28, 2014, prior to the consummation of the Merger, Golf Rounds.com, Inc. amended its certificate of incorporation to effect a 14.62 to 1 reverse stock split (the "Reverse Stock Split") whereby every 14.62 issued and outstanding shares of its common stock automatically converted into one share of common stock, subject to the treatment of fractional share interests. All references to shares of common stock of the Company herein are discussed on a post-Reverse Stock Split basis for all periods presented. Recapitalization On May 28, 2014 (the "recapitalization date"), Fuse Medical, LLC was acquired by Fuse Medical, Inc. (formerly Golf Rounds.com, Inc.), an inactive publicly-held company, in a reverse merger transaction accounted for as a recapitalization of Fuse Medical, LLC (the "Recapitalization" or the "Reverse Merger"). All of the units reflecting membership interests in Fuse Medical, LLC that were issued and outstanding immediately prior to the effective time of the Merger were cancelled and converted into 3,600,000 shares of Fuse Medical, Inc.'s common stock (on a post-Reverse Stock Split basis), representing 90% of the Registrant's issued and outstanding common stock after giving effect to the Merger (the "Merger Consideration"). The Merger Consideration was allocated among the members of Fuse Medical, LLC immediately prior to the effective time of the Merger (the "Holders") in accordance with Fuse Medical's limited liability company operating agreement. Prior to the Merger, and effective on and as of the business day immediately prior to the effective time of the Merger, the general partners in Fuse Medical V, LP and Fuse Medical VI, LP agreed to surrender their interests and the individual physicians that owned the remaining limited partnership interests in Fuse Medical V, LP and Fuse Medical VI, LP agreed to exchange their interest to corresponding interests in Fuse Medical, LLC, each becoming one of the Holders. For accounting purposes, Fuse Medical, LLC is the acquirer and Fuse Medical, Inc. is the acquired company because, immediately following the completion of the transaction, Fuse Medical, LLC acquired both voting and management control of the consolidated entity. The Company is deemed to have issued 401,280 common shares to the original stockholders of the publicly-held entity. Accordingly, after completion of the recapitalization, the historical operations of the Company are those of Fuse Medical, LLC and the operations since the recapitalization date are those of Fuse Medical, LLC and Fuse Medical, Inc. The assets and liabilities of both companies are combined at historical cost on the recapitalization date. No step-up in basis or intangible assets or goodwill was recorded in this transaction. As a result of the closing of the Merger, the Company had authorized capital of 500,000,000 shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock, par value $0.01 per share. The assets acquired and liabilities assumed from the publicly-held company have been accounted for as an adjustment to accumulated deficit upon the recapitalization and were as follows (See Notes 3 and 8): Cash and cash equivalents $ 641 Current assets 10,595 Liabilities assumed (39,647 ) Net $ (28,411 ) As a result of the Merger, Fuse Medical, LLC transitioned from a nontaxable entity to a taxable entity. Accordingly, the undistributed earnings of Fuse Medical, LLC of $26,494 were reclassified from Retained earnings to Additional paid-in capital. Common Stock On December 31, 2014, the outstanding principal balance of notes payable of $1,512,014 to related parties and accrued interest of $57,893 was converted into 1,509,528 common shares of the Company having a fair value of $754,764. The aggregate excess of the principal balance over the fair value of the shares issued of $815,143 has been reflected as a contribution of capital (See Notes 8 and 13). On January 12, 2015, the Company sold 200,000 common shares for $100,000, or $0.50 per share, to an entity controlled by certain officers and directors of the Company (See Note 13). In March 2015, the Company began selling shares of its common stock at $0.50 per share in private offerings with the intent of raising up to $2,000,000 from these private offerings. During March and April 2015, the Company sold an aggregate of 180,000 common shares to investors for aggregate proceeds of $90,000, or $0.50 per share. The Company closed the private offerings shortly after the last sale. On August 27, 2015, the Company awarded the following common shares to four employees for services rendered: (i) 450,000 common shares to the Chief Executive Officer; (ii) 250,000 common shares to the Chief Operating Officer; (iii) 150,000 common shares to the Chief Financial Officer; and (iv) 150,000 common shares to the Vice President of Sales. The closing price of the Company's common stock on the trading day immediately preceding the awarding of the common shares was $0.25. Accordingly, an aggregate of $250,000 of expense was recognized in association with the issuance of these common shares. Subscriptions Receivable During the year ended December 31, 2014, subscriptions receivable of $500 were collected. Distributions During the year ended December 31, 2014 (prior to the closing of the reverse merger transaction), distributions of $40,583 were made to the general partners in Fuse Medical V, LP and Fuse Medical VI, LP and the individual physicians that owned the remaining limited partnership interests in Fuse Medical V, LP and Fuse Medical VI, LP. Stock Options On July 17, 2015, Ross Eichberg, the General Counsel for the Company resigned. In connection with Mr. Eichberg's resignation, the Company granted Mr. Eichberg options to purchase 600,000 shares of the Company's common stock at $0.26 per share, which was equal to 90% of the 30-day trading average of the Company's common stock prior to the grant date of July 17, 2015. The options have a term of five years from the grant date. The options vested immediately, but become exercisable as follows: 100,000 (1/6) of the options shall become exercisable 13 months after the grant date and an additional 100,000 options (1/6) shall become exercisable each of the following five months thereafter so that all of the options shall become exercisable as of 18 months after the grant date. The fair value of the stock options issued was $168,000, all of which was recognized immediately as an expense because the stock options were fully vested as of the grant date. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of the Company's stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted to employees during the years ended December 31, 2015 and 2014: For the For the Year Ended Year Ended Assumptions December 31, 2015 December 31, 2014 Expected life (years) 3.2 n/a Expected volatility 223% n/a Weighted-average volatility 223% n/a Risk-free interest rate 1.05% n/a Dividend yield 0.0% n/a Expected forfeiture rate n/a n/a The Company utilized the simplified method to estimate the expected life for stock options granted to employees. The simplified method was used as the Company does not have sufficient historical data regarding stock option exercises. The expected volatility is based on historical volatility of the Company's common stock subsequent to the closing of the merger on May 28, 2014. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected life of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. A summary of the Company's stock option activity during the year ended December 31, 2015 is presented below: Weighted Weighted Average Average Remaining Aggregate No. of Exercise Contractual Intrinsic Shares Price Term Value Balance outstanding at December 31, 2014 11,628 $ 9.98 Granted 600,000 $ 0.26 Exercised - Forfeited - Expired (2,052 ) $ 8.77 Balance outstanding at December 31, 2015 609,576 $ 0.42 4.5 $ - Exercisable at December 31, 2015 9,576 $ 10.23 1.3 $ - The weighted-average grant-date fair value of options granted during the year ended December 31, 2015 was $0.28. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Note 11. Income Taxes | For the year ended December 31, 2015, net loss was $801,547 and, as such, there was no provision for income taxes for that period due to the losses. Prior to the recapitalization discussed in Note 1, the consolidated financial statements consisted of Fuse Medical, LLC, a Delaware-registered limited liability corporation, Fuse Medical V, LP and Fuse Medical VI, LP, Texas-registered limited partnerships; all of which are taxed as partnerships for federal income tax purposes. The components of income tax expense (benefit)are as follows: For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Current: Federal $ - $ - State - - - - Deferred: Federal - - State - - - - Total Income tax expense (benefit) $ - $ - Significant components of the Company's deferred income tax assets and liabilities are as follows: December 31, 2015 December 31, 2014 Deferred tax assets: Net operating loss carryover $ 623,287 $ 379,575 Intangibles - 9,456 Accounts receivable 5,301 77 Compensation 58,800 - Inventories 12,594 46,662 Total deferred tax assets 699,982 435,770 Deferred tax liabilities: Property and equipment 731 (3,040 ) Total deferred tax liabilities 731 (3,040 ) Deferred tax assets, net 700,713 432,730 Valuation allowance: Beginning of year (432,730 ) - (Increase) decrease during year (267,983 ) (432,730 ) Ending balance (700,713 ) (432,730 ) Net deferred tax asset $ - $ - A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company recorded a valuation allowance in 2015 and 2014 due to the uncertainty of realization. Management believes that based upon its projection of future taxable operating income for the foreseeable future, it is more likely than not that the Company will not be able to realize the tax benefit associated with deferred tax assets. The net change in the valuation allowance during the years ended December 31, 2015 and 2014 was an increase of $267,983 and $432,730, respectively. At December 31, 2015, the Company had $1,780,819 of net operating loss carryforwards which will expire from 2016 to 2035. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of December 31, 2015, tax years 2011 through 2014 remain open for IRS audit. The Company has received no notice of audit from the Internal Revenue Service for any of the open tax years. A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Statutory U.S. federal income tax rate 35.0 % 35.0 % State income taxes, net of federal tax benefit 0.0 % 0.0 % Permanent differences -0.5 % -8.9 % Other reconciling items -1.2 % 14.5 % Change in valuation allowance -33.3 % -40.6 % Effective income tax rate 0.0 % 0.0 % |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2015 | |
Concentrations | |
Note 12. Concentrations | Concentration of Credit Risk The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2015. On January 1, 2013, the standard insurance amount of $250,000 per depositor, per bank, became effective. As of December 31, 2015 and 2014, the Company's bank balances did not exceed FDIC insured amounts. Concentration of Revenues, Accounts Receivable and Suppliers For the years ended December 31, 2015 and 2014, the Company had significant customers with individual percentage of total revenues equaling 10% or greater as follows: For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Customer 1 70.6 % 52.1 % Customer 2 12.3 % - Customer 3 - 21.4 % Totals 82.9 % 73.5 % At December 31, 2015 and 2014, concentration of accounts receivable with significant customers representing 10% or greater of accounts receivable was as follows: December 31, 2015 December 31, 2014 Customer 1 62.7 % 47.6 % Customer 2 13.0 % 26.7 % Totals 75.7 % 74.3 % For the years ended December 31, 2015 and 2014, the Company had significant suppliers representing 10% or greater of goods purchased as follows: For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Supplier 1 69.4 % 83.6 % Supplier 2 22.5 % - Supplier 3 - 16.4 % Totals 91.9 % 100.0 % |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | |
Note 13. Related Party Transactions | During the year ended December 31, 2014, the Company advanced an aggregate of $92,611 to and received an aggregate of $74,993 from three entities that are owned partially by certain officers and directors of the Company. The advances were unsecured, non-interest bearing and due on demand. During the three months ended March 31, 2015, the Company allocated an aggregate of $43,240 of compensation paid to the Company's General Counsel to one of the entities that is owned partially by certain officers and directors of the Company. During the year ended December 31, 2015, the Company was reimbursed the entire amount of $93,240 due from the three entities that are owned partially by certain officers and directors of the Company. The balance due from the three entities was $0 and $50,000 as of December 31, 2015 and 2014, respectively (See Note 4). On September 1, 2015, the Company transferred a security deposit of $2,489 and property and equipment having a net book value of $3,062 in order to settle $6,000 of expense reimbursement to an individual that was a former director and Chief Executive Officer of the Company, resulting in a gain on disposition of $449. On September 1, 2015, the Company entered into an Assignment and Assumption of Lease Agreement (the "Agreement") whereby the Company assigned the operating lease for its corporate headquarters to an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. Under the Agreement, which was cosigned by the landlord, the entity to which the lease was assigned assumed all further obligations under the lease (See Notes 5 and 9). As of December 31, 2015 and 2014, $22,202 and $43,134, respectively, is owed to officers of the Company or entities controlled by officers of the Company. This amount is included in accounts payable – related parties on the accompanying consolidated balance sheet. On December 31, 2013, the Company issued a two-year promissory note payable in exchange for aggregate cash proceeds of $60,000. During the period from January 15, 2014 through June 16, 2014, the Company issued several two-year promissory notes in exchange for aggregate cash proceeds of $724,238. The funds were received from entities controlled by certain officers and directors of the Company. The officers and directors also owned or partially owned the entities from which the funds were received. The notes were unsecured, bore interest at 7.0% and required 18 monthly payments of interest only commencing at the beginning of month seven. The notes included a provision that in the event of default the interest rate would have increased to the default interest rate of 18%. The first six months of interest was deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest was due at maturity (See Notes 8 and 10). During the period from January 14, 2014 through May 23, 2014, the Company issued three two-year promissory notes in exchange for aggregate cash proceeds of $727,776 from an entity that is controlled by an individual that was a former director and Chief Executive Officer of the Company. The notes were unsecured, bore interest at 7.0% and required 18 monthly payments of interest only commencing at the beginning of month seven. The notes included a provision that in the event of default the interest rate would have increased to the default interest rate of 18%. The first six months of interest was deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest was due at maturity (See Notes 8 and 10). On December 31, 2014, the outstanding principal balance of notes payable of $1,512,014 and accrued interest of $57,893 was converted into 1,509,528 common shares of the Company that had a fair value of $754,764. The aggregate excess of the principal balance over the fair value of the shares issued of $815,143 has been reflected as a contribution of capital (See Notes 8 and 10). On January 15, 2015, the Company issued a two-year promissory note in exchange for cash proceeds of $100,000 from an entity that is controlled by an individual that was a former director and Chief Executive Officer of the Company. The note is unsecured, bears interest at 7.0% and requires 18 monthly payments of interest only commencing at the beginning of month seven. The note includes a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity (See Note 8). Commencing January 1, 2013 through January 31, 2014, the Company occupied office space on a month-to-month basis for its corporate headquarters for $500 a month from Crestview Farm, an entity controlled by an individual that was a former director and Chief Executive Officer of the Company. The individual serves as the Manager of Crestview Farm. Rent expense for these facilities was $500 for the year ended December 31, 2014 (See Note 9). On May 1, 2014, the Company entered into a one-year consulting agreement with an individual who is a director of the Company whereby the individual shall be a Medical Director and shall receive compensation of $9,000 per month. Effective September 1, 2015, the compensation to this individual was reduced to $0 per month (See Note 9). On January 12, 2015, the Company sold 200,000 common shares for $100,000, or $0.50 per share, to an entity controlled by certain officers and directors of the Company (See Note 10). During the period from inception through December 31, 2014, several members of the Company's management provided services at no charge to the Company. The financial statements do not include an estimate of the fair value of these services. |
Significant Accounting Polici20
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies Policies | |
Principles of Consolidation | The consolidated financial statements include the accounts of Fuse Medical, LLC, and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts and other receivables, valuation of inventories, the estimates of depreciable lives and valuation of property and equipment, and the valuation allowance on deferred tax assets. |
Earnings (Loss) Per Share | The Company's computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company's net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would have occurred if securities or other contracts to issue common shares (e.g. warrants and options) had been exercised or converted into common shares at the beginning of the period, or issuance date, if later, and had shared in the net income (loss) of the Company. Diluted EPS is computed using the treasury stock method, which assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common shares at the average market price during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The weighted average number of common shares outstanding has been retroactively restated for: (1) the equivalent number of shares received by the accounting acquirer as a result of the reverse merger as if these shares had been outstanding as of the beginning of the earliest period presented; and (2) the 14.62 to 1 reverse stock split that occurred May 28, 2014 (See Note 10). As of December 31, 2015 and 2014, common stock equivalents included options to purchase 609,576 and 11,628 common shares, respectively. These instruments are not considered in the calculation of diluted loss per share because the effect would be anti-dilutive. |
Fair Value Measurements | Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: Level 1 Level 2 Level 3 The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of notes payable approximates their fair value based upon their effective interest rates. |
Cash and Cash Equivalents | The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts Receivable | Accounts receivables are non-interest bearing and are stated at gross invoice amounts less an allowance for doubtful accounts receivable. Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential bad debts. The Company estimates its allowance for doubtful accounts by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations, such as bankruptcy proceedings and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are reevaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary. Accounts deemed uncollectible are written off in the period when the Company has exhausted its efforts to collect overdue and unpaid receivables or otherwise has evaluated other circumstances that indicate that the Company should abandon such efforts. Previously written-off accounts receivable subsequently collected are recognized as a reduction of bad debt expense when funds are received. |
Inventories | Inventories are stated at the lower of cost (first-in, first-out) or market. Inventories consist entirely of finished goods and include biologics, internal fixation products, bone substitute materials, and tendon anchor systems. The Company reviews the market value of inventories whenever events and circumstances indicate that the carrying value of inventories may not be recoverable from the estimated future sales price less cost of disposal and normal gross profit. In cases where the market values are less than the carrying value, a write down is recognized equal to an amount by which the carrying value exceeds the market value of inventories. |
Property and Equipment | Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets per the following table. Leasehold improvements are amortized over the lesser of their useful life or the lease term. Expenditures for additions and improvements are capitalized while repairs and maintenance are expensed as incurred. Category Amortization Period Computer equipment 3 years Furniture and fixtures 5 years Office equipment 3 years Software 3 years Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed and a gain or loss is recorded in the consolidated statements of operations. |
Long-Lived Assets | The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry or economic trends, a significant decline in the Company's stock price for a sustained period of time, and changes in the Company's business strategy. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. Based upon management's assessment, there were no indicators of impairment of its long lived assets at December 31, 2015 and 2014. |
Revenue Recognition | The Company recognizes revenue when: (i) persuasive evidence of an arrangement exists; (ii) the fees are fixed or determinable; (iii) no significant Company obligations remain; and (iv) collection of the related receivable is reasonably assured. The Company reports revenues for transactions in which it is the primary obligor on a gross basis and revenues in which it acts as an agent (earning a fixed percentage of the sale) on a net basis, (net of related costs). Revenues are comprised of sales of medical biologics, internal fixation products, bone substitute materials and other medical supplies. For customers that order products as needed (i.e. for specific cases), the Company provides these products on a consignment basis and invoices the customer on the date the product is utilized. For other customers, the Company invoices the customers when the products are shipped. Payment terms are net 30 days after the invoice date. Products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are determinable and estimable. Net revenues have been reduced to account for sales returns, rebates and other incentives. |
Cost of Revenues | Cost of revenues consists of cost of goods sold and freight and shipping costs for items sold to customers. |
Shipping and Handling Fees | The Company includes shipping and handling fees billed to customers in revenues and the related costs in cost of revenues. |
Leases | The Company enters into various lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Leases may contain initial periods of free rent and/or periodic escalations. When such items are included in a lease agreement, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as a deferred rent liability. The Company expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred. |
Income Taxes | The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of projected future taxable income. Prior to the recapitalization discussed in Note 1, the members of the consolidated group included Fuse Medical, LLC, a Delaware-registered limited liability corporation, and Fuse Medical V, LP and Fuse Medical VI, LP, which were Texas-registered limited partnerships; all of which are taxed as partnerships for federal income tax purposes. As such, there were no state or corporate tax liabilities due for these entities. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of December 31, 2015, the Company had no liabilities for uncertain tax positions. The Company's policy is to recognize interest and penalties related to income tax matters as a component of income tax expense. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. |
Segment Information | The Company operates in one reportable segment including medical products and supplies. The Company's chief operating decision maker, its CEO and President, manages the Company's operations as a whole, and no revenue, expense or operating income information is evaluated by the chief operating decision maker on any component level. |
Stock-Based Compensation | Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For employee stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. For non-employee stock-based awards, the Company calculates the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period and the prorata compensation expense is adjusted accordingly until such time the non-employee award is fully vested, at which time the total compensation recognized to date shall equal the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient's performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company's financial statements and disclosures. In June 2014, the FASB issued Accounting Standards Update No. 2014-12, "Compensation – Stock Compensation (Topic 718)". The ASU was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company's consolidated financial position or results of operations. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern", which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on the Company's financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, "Leases", which requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of the adoption of ASU 2016-02 on the Company's financial statements and disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
Significant Accounting Polici21
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies Tables | |
Estimated useful lives of assets | Category Amortization Period Computer equipment 3 years Furniture and fixtures 5 years Office equipment 3 years Software 3 years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property And Equipment Tables | |
Property and Equipment | December 31, 2015 December 31, 2014 Computer equipment $ 31,053 $ 36,240 Furniture and fixtures 9,315 15,977 Leasehold improvements 6,728 - Office equipment 1,580 - Software 10,500 10,500 59,176 62,717 Less: accumulated depreciation (34,198 ) (13,756 ) Property and equipment, net $ 24,978 $ 48,961 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Expenses Tables | |
Accrued expenses | December 31, 2015 December 31, 2014 Accrued payroll and related costs $ 2,705 $ 235 Accrued interest 3,796 21 Other accrued expenses 5,766 10,110 Accrued expenses $ 12,267 $ 10,366 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable Tables | |
Schedule of notes payable | December 31, 2015 December 31, 2014 Note payable - originating July 30, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at July 29, 2015 $ - $ 6,000 Note payable - originating August 29, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at August 28, 2015 - 11,250 Note payable - related party originating January 15, 2015; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 15, 2017 100,000 - Total 100,000 17,250 Less: Current maturities - (17,250 ) Amount due after one year $ 100,000 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments And Contingencies Tables | |
Summary of Operating Leases | Year ending December 31, 2016 $ 46,116 2017 47,124 2018 35,910 $ 129,150 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders Equity Tables | |
The assets acquired and liabilities | Cash and cash equivalents $ 641 Current assets 10,595 Liabilities assumed (39,647 ) Net $ (28,411 ) |
Summary of compensation expense for stock options granted to employees | For the For the Year Ended Year Ended Assumptions December 31, 2015 December 31, 2014 Expected life (years) 3.2 n/a Expected volatility 223% n/a Weighted-average volatility 223% n/a Risk-free interest rate 1.05% n/a Dividend yield 0.0% n/a Expected forfeiture rate n/a n/a |
Summary of the stock option activity | Weighted Weighted Average Average Remaining Aggregate No. of Exercise Contractual Intrinsic Shares Price Term Value Balance outstanding at December 31, 2014 11,628 $ 9.98 Granted 600,000 $ 0.26 Exercised - Forfeited - Expired (2,052 ) $ 8.77 Balance outstanding at December 31, 2015 609,576 $ 0.42 4.5 $ - Exercisable at December 31, 2015 9,576 $ 10.23 1.3 $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes Tables | |
Summary of income tax expense (benefit) | For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Current: Federal $ - $ - State - - - - Deferred: Federal - - State - - - - Total Income tax expense (benefit) $ - $ - |
Summary of deferred income tax assets and liabilities | December 31, 2015 December 31, 2014 Deferred tax assets: Net operating loss carryover $ 623,287 $ 379,575 Intangibles - 9,456 Accounts receivable 5,301 77 Compensation 58,800 - Inventories 12,594 46,662 Total deferred tax assets 699,982 435,770 Deferred tax liabilities: Property and equipment 731 (3,040 ) Total deferred tax liabilities 731 (3,040 ) Deferred tax assets, net 700,713 432,730 Valuation allowance: Beginning of year (432,730 ) - (Increase) decrease during year (267,983 ) (432,730 ) Ending balance (700,713 ) (432,730 ) Net deferred tax asset $ - $ - |
Summary of U.S. statutory rate to the effective income tax rate | For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Statutory U.S. federal income tax rate 35.0 % 35.0 % State income taxes, net of federal tax benefit 0.0 % 0.0 % Permanent differences -0.5 % -8.9 % Other reconciling items -1.2 % 14.5 % Change in valuation allowance -33.3 % -40.6 % Effective income tax rate 0.0 % 0.0 % |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Revenues [Member] | |
Concentration of Revenues, Accounts Receivable and Supplier | For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Customer 1 70.6 % 52.1 % Customer 2 12.3 % - Customer 3 - 21.4 % Totals 82.9 % 73.5 % |
Accounts Receivable [Member] | |
Concentration of Revenues, Accounts Receivable and Supplier | December 31, 2015 December 31, 2014 Customer 1 62.7 % 47.6 % Customer 2 13.0 % 26.7 % Totals 75.7 % 74.3 % |
Accounts Payable [Member] | |
Concentration of Revenues, Accounts Receivable and Supplier | For the For the Year Ended Year Ended December 31, 2015 December 31, 2014 Supplier 1 69.4 % 83.6 % Supplier 2 22.5 % - Supplier 3 - 16.4 % Totals 91.9 % 100.0 % |
Nature of Operations and Goin29
Nature of Operations and Going Concern (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net loss | $ (801,547) | $ (1,405,045) | |
Net cash used in operating activities | (375,140) | (1,168,784) | |
Cash and cash equivalents | 8,157 | 67,555 | $ 12,339 |
Stockholders' equity | 4,957 | 198,504 | $ 102,136 |
Working capital | 76,157 | ||
Proceeds from issuance of promissory notes to related parties | 100,000 | $ 724,238 | |
Proceeds from sale of common stock | 190,000 | ||
Significant Stockholder [Member] | |||
Proceeds from sale of common stock | 100,000 | ||
Private Offerings [Member] | |||
Proceeds from sale of common stock | $ 90,000 |
Significant Accounting Polici30
Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Computer equipment [Member] | |
Estimated useful lives of the assets | 3 years |
Furniture and fixtures [Member] | |
Estimated useful lives of the assets | 5 years |
Office equipment [Member] | |
Estimated useful lives of the assets | 3 years |
Software [Member] | |
Estimated useful lives of the assets | 3 years |
Significant Accounting Polici31
Significant Accounting Policies (Details Narrative) - shares | Dec. 31, 2015 | Dec. 31, 2014 |
Significant Accounting Policies Details Narrative | ||
Common stock equivalents included options to purchase | 609,576 | 11,628 |
Advances to Golf Rounds.com, 32
Advances to Golf Rounds.com, Inc. (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Advances To Golf Rounds.com Inc. Details Narrative | ||
Interest income | $ 1,177 |
Other Receivables - Related P33
Other Receivables - Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other Receivables - Related Parties Details Narrative | ||
Advances to related parties | $ 43,240 | $ 92,611 |
Repayments received from related parties | 93,240 | 74,993 |
Due from related parties | $ 0 | $ 50,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment, gross | $ 59,176 | $ 62,717 |
Less: accumulated depreciation | (34,198) | (13,756) |
Property and equipment, net | 24,978 | 48,961 |
Computer equipment [Member] | ||
Property and equipment, gross | 31,053 | $ 36,240 |
Office equipment [Member] | ||
Property and equipment, gross | 1,580 | |
Software [Member] | ||
Property and equipment, gross | 10,500 | $ 10,500 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 6,728 | |
Furniture and fixtures [Member] | ||
Property and equipment, gross | $ 9,315 | $ 15,977 |
Property and Equipment (Detai35
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $ 25,073 | $ 13,280 |
Furniture and fixtures net book value | 4,156 | |
Loss on disposals of property and equipment | 2,856 | |
Proceeds from the disposal of property and equipment | $ 1,300 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accrued Expenses Details | ||
Accrued payroll and related costs | $ 2,705 | $ 235 |
Accrued interest | 3,796 | 21 |
Other accrued expenses | 5,766 | 10,110 |
Accrued expenses | $ 12,267 | $ 10,366 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total notes payble | $ 100,000 | $ 17,250 |
Less: Current maturities | $ (17,250) | |
Amount due after one year | $ 100,000 | |
Notes Payable [Member] | ||
Total notes payble | $ 6,000 | |
Notes Payable 1 [Member] | ||
Total notes payble | $ 11,250 | |
Notes Payable 2 [Member] | ||
Total notes payble | $ 100,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Notes Payable Details Narrative | ||
Interest expense on notes payable | $ 7,112 | $ 69,675 |
Accrued interest payable | $ 3,796 | $ 21 |
Commitments and Contingencies39
Commitments and Contingencies (Details) | Dec. 31, 2015USD ($) |
Commitments And Contingencies Details | |
2,016 | $ 46,116 |
2,017 | 47,124 |
2,018 | 35,910 |
Total | $ 129,150 |
Commitments and Contingencies40
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments And Contingencies Details Narrative | ||
Rent expense | $ 33,791 | $ 44,859 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Details) | Dec. 31, 2015USD ($) |
Stockholders Equity Deficit Details | |
Cash and cash equivalents | $ 641 |
Current assets | 10,595 |
Liabilities assumed | (39,647) |
Net | $ (28,411) |
Stockholders' Equity (Deficit42
Stockholders' Equity (Deficit) (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stockholders Equity Deficit Details 1 | ||
Expected life (years) | 3 years 2 months 12 days | |
Expected volatility | 223.00% | |
Weighted-average volatility | 223.00% | |
Risk-free interest rate | 1.05% | |
Dividend yield | 0.00% | |
Expected forfeiture rate |
Stockholders' Equity (Deficit43
Stockholders' Equity (Deficit) (Details 2) | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Stockholders Equity Deficit Details 1 | |
Number of Shares, Beginning Balance | 11,628 |
Granted, No. Of Shares | 600,000 |
Exercised, No. Of Shares | |
Forfeited, No. Of Shares | |
Expired, No. Of Shares | (2,052) |
Number of Shares, Ending Balance | 609,576 |
Exercisable at December 31, 2014, No. Of Shares | 9,576 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 9.98 |
Granted, Weighted Average Exercise Price | $ / shares | 0.26 |
Expired, Weighted Average Exercise Price | $ / shares | 8.87 |
Weighted Average Exercise Price, Ending Balance | $ / shares | 0.42 |
Exercisable, Weighted Average Exercise Price | $ / shares | $ 10.23 |
Weighted Average Remaining Contractual Term, Balance outstanding | 4 years 6 months |
Weighted Average Remaining Contractual Term, Exercisable | 1 year 3 months 18 days |
Aggregate Intrinsic Value, Balance outstanding | $ | |
Aggregate Intrinsic Value, Exercisable | $ |
Stockholders' Equity (Deficit44
Stockholders' Equity (Deficit) (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stockholders Equity Deficit Details Narrative | ||
Preferred Stock Par Value (In US Dollars) | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock Par Value (In US Dollars) | $ 0.01 | $ 0.01 |
Common Stock Shares Authorized | 100,000,000 | 500,000,000 |
Weighted-average grant-date fair value of options granted during the year | $ 0.28 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||
Federal | ||
State | ||
Total | ||
Deferred: | ||
Federal | ||
State | ||
Total | ||
Total Income tax expense (benefit) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred tax assets: | ||
Net operating loss carryover | $ 623,287 | $ 379,575 |
Intangibles | 9,456 | |
Accounts receivable | $ 5,301 | $ 77 |
Compensation | 58,800 | |
Inventories | 12,594 | $ 46,662 |
Total deferred tax assets | 699,982 | 435,770 |
Deferred tax liabilities: | ||
Property and equipment | 731 | (3,040) |
Total deferred tax liabilities | 731 | (3,040) |
Deferred tax assets, net | 700,713 | 432,730 |
Valuation allowance: | ||
Beginning of year | (432,730) | |
(Increase) decrease during year | (267,983) | (432,730) |
Ending balance | $ (700,713) | $ (432,730) |
Net deferred tax asset |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 2 | ||
Statutory U.S. federal income tax rate | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 0.00% | 0.00% |
Permanent differences | (0.50%) | (8.90%) |
Other reconciling items | (1.20%) | 14.50% |
Change in valuation allowance | (33.30%) | (40.60%) |
Effective income tax rate | 0.00% | 0.00% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details Narrative | ||
Net loss | $ (801,547) | $ (1,405,045) |
Change in valuation allowance | 267,983 | $ 432,730 |
Net operating loss carryforwards | $ 1,780,819 | |
Net operating loss carryforwards expire | From 2016 to 2035 |
Concentrations (Details)
Concentrations (Details) - Revenues [Member] | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Concentration of Revenues | 82.90% | 73.50% |
Customer 1 [Member] | ||
Concentration of Revenues | 70.60% | 52.10% |
Customer 2 [Member] | ||
Concentration of Revenues | 12.30% | |
Customer 3 [Member] | ||
Concentration of Revenues | 21.40% |
Concentrations (Details 1)
Concentrations (Details 1) - Accounts Receivable [Member] | Dec. 31, 2015 | Dec. 31, 2014 |
Concentration of accounts receivable | 75.70% | 74.30% |
Customer 1 [Member] | ||
Concentration of accounts receivable | 62.70% | 47.60% |
Customer 2 [Member] | ||
Concentration of accounts receivable | 13.00% | 26.70% |
Concentrations (Details 2)
Concentrations (Details 2) - Goods Purchased [Member] | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Concentrations Supplier | 91.90% | 10.00% |
Supplier 1 [Member] | ||
Concentrations Supplier | 69.40% | 83.60% |
Supplier 2 [Member] | ||
Concentrations Supplier | 22.50% | |
Supplier 3 [Member] | ||
Concentrations Supplier | 16.40% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transactions Details Narrative | ||
Repayments received from related parties | $ 93,240 | $ 74,993 |
Other receivables - related parties | 50,000 | |
Accounts payable - related parties | $ 22,202 | $ 43,134 |